Why Retirement Is Harder for Women

Libby Kane

There are a lot of ways that men and women differ, but we bet there’s one you might not guess right off the bat.


Yes, retirement. According to a January 2012 study by Ameriprise Financial, more men than women have determined how much money they’ll need to retire, have set aside money in their investments for retirement and feel confident that they’ll reach their goals.

In fact, a 2010 study found that 92% of women don’t feel educated enough to reach their retirement savings goals, but that 56% of them want to be.

Luckily, financial education is our specialty.

We spoke with Stephany Kirkpatrick CFP®, AIF®, LearnVest Financial Planner in Residence and former Director of Retirement Planning at Pension Architects to figure out why women have such a hard time with retirement saving … and how you can get on track.

It’s in the Numbers

Women face some challenges that are purely logistical, like the simple fact that they live longer than men. Today, the average American white male can expect to live 76.2 years, whereas the average American white female can look forward to 80.9 years.

So, if a man and a woman both retire at age 67 (the traditional retirement age of 65 is quickly becoming outdated), a man needs to support himself for a little over nine years; a woman, nearly 14. Let’s say our hypothetical man and woman each earned $70,000 per year when working. Keeping in mind that a person needs at least 70% of her income to support herself for each year of retirement, the woman needs at least $280,000 more than the man to float her retirement.

Plus, Stephany points out that many women take time out of the workforce to focus on their families—or opt not to work at all—which means they’re automatically operating at a loss when it comes to money earned. It’s likely that their retirement accounts will reflect this.

It’s Also in the Mind

“Traditionally, women have felt more intimidated by investing than men have,” Stephany explains. “They want to learn, but they lack the initial knowledge and confidence to get them started early in life.”

Or, as one of our recent makeover winners, who hadn’t begun saving for retirement, put it: “I always used to think so big picture, like—Figure Out Retirement.” Her fear meant, despite earning a good salary, she felt paralyzed by the prospect and never got started. “That’s not really a meaningful way to look at things,” she says, “and I’m learning that.” (See how Stephany is helping her get started saving for retirement here.)

Also, many young women today have parents who were raised in the fifties, when Dad managed the family finances and Mom let him. Fewer daughters have role models to teach them about money than sons do. Consequently, neither do their granddaughters. “Then we aren’t taught personal finance in high school and usually not in college, so where do we learn? Who do we turn to?” Stephany asks. (Points if you put the answer in the comments!)

How’s That Retirement Saving Coming?

Were you able to open a 401(k)? How about another account? Share your retirement saving strategies and learn from those of your fellow LearnVesters in LV Discussions. SHARE

You Aren’t Doomed

Female-specific retirement issues are well-documented, but if the biggest issue facing women is getting started—in order to save more—there are solutions. In fact, Stephany’s small steps are all you need to ace your retirement plan.

If You Aren’t Saving …

Open a retirement account today. No, really. Today. Nothing impacts your money more than time, which gives your portfolio a chance to grow and expand–and enables you to take on riskier but higher-return investments because you have a longer time horizon to mediate the risk. This is as easy as:

1. Contacting human resources if your employer offers a matching 401(k), or

2. Going to a brokerage such as Vanguard, Charles Schwab or Merrill Lynch, for example, and following the instructions for opening an IRA. To find out what this process involves, read our intern’s account.

As for which type of account is right for you, check out LearnVest’s Retiring in Style Bootcamp, and see the impact every extra year has on your savings in our Early Bird calculator.

If You Are Saving …

Step it up. Increase the contribution to your retirement account by 1% every quarter. If your finances are especially tight, make it twice per year. For many of us, 1% is about $20-$50 per paycheck, and won’t be missed too sorely if we set up an automatic contribution. After four quarterly increases of 1%, you’ll have increased your contributions by 4%. If you’re already maxing out your retirement plans (the contribution limit is $5,000 per year for an IRA, and $17,000 for a 401(k) in 2012), you’re already on the right track—which gives you freedom to focus on other savings goals, like buying a home or going on vacation.

Either Way …

Run your numbers. The ING Retirement Needs calculator asks for your income, current savings, age and a few more more facts in order to determine how much money you’ll need to finance your retirement, as well as how long the money you have currently saved will last you. ”Don’t be overwhelmed by the information,” Stephany says. “Let it show you that retirement needs to be a priority.”

Even if the outputs say you’ve got to save a huge sum of money, the situation may not be as overwhelming as it seems: Putting away a mere $35 per month (about $1.16 per day) could turn into $18,000 in 20 years.*

And, the sooner you get started, the bigger your nest egg will grow.

*These figures are calculated using 7% interest.

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  • Laura

    This is why, anytime I figure something out or learn something, I make sure to bring it up in conversation with my girlfriends or parents.

    We HAVE to pass on info to others, even if it’s a small comment that someone may ask you to expand upon later….

    True story: One of my mom’s sixty something year old friends was divorced by her husband. Part of their settlement was that he had to buy her a car of equal or better value to the car he had for himself. She got the car, and the next day was telling her girlfriends about how nice it was. Someone asked her if she’d put the title to the car in her safe or at the bank in a safety deposit box. Her response was that her ex-husband said he’d hang onto the pink slip for her! When her friends pointed out that this meant he STILL owned her car, she sobbed, “How was I supposed to know?! Nobody educates women on these things!”

    Chilling, but understandable.

    Thank you learnvest and others for educating us–that’s half the battle!

  • Susan Buchanan

    I’m really glad to read an article about this, as it’s been on my mind lately. But I’m really confused about why a 7% interest rate is being used to calculate the figures. When I look at Roth IRAs, the best I can find is 1%. Where does the 7% come from?

    • Anonymous

      Hi Susan,

      When you say that you see 1%, where exactly are you looking? 

      IRAs are essentially accounts that can contain many different kinds of investments, so they don’t have an interest rate in their own right. Rather, you can invest in things like stocks, bonds and mutual funds and put them into your IRA, as though it were a folder containing them. We use the 7% to estimate because that’s the historical average stock market return, so we’re assuming that readers generally put stock investments in their IRA portfolios. 

      That said, it is possible to put investments like CDs in your IRA, which have much lower interest rates. Nowadays, many savings accounts and CD interest rates hover around 1%. Perhaps you’re looking at the rates for investments like those?

      I hope that helps!

      Allison Kade
      LV’s Deputy Editor

  • Ruth H.

    I love hearing that other women are spreading the word about the importance of retirement. I was very fortunate in that both of my parents, my mom especially, had solid retirement investments and set a great example about the importance of saving. I contrast that to my boyfriend’s mom, who was VP of a regional credit agency but has no retirement savings aside from social security.

    I’m contacting my credit union to set up a Roth IRA today!

  • http://profile.yahoo.com/KZJYZ5BZM7G7I3BFU3RRDJI3TM Kerry


    I feel like with current 401k returns as they are, 7% is a hard number to achieve.  How do we figure out what companies to invest in to get a safe 7%?


  • Ora

    Last month, I registered for “Retirement Planning” (an evening college course), and I was allowed to bring my husband for free.  The course was taught by a CFP (a male).  I’ve learned a lot!  This year, I’m also insisting my husband show me the process of doing our taxes.  I have a master’s degree in Nursing, but I’ve been ignorant too long about finances…a very different vocabulary.  BTW, I’m not retiring until ~ age 92. 

  • Gertrude

    I’d like to know who makes 70,000 a year. I’m a college graduate and I make about 25,000 a year. I will be getting that much or more in retirement if I retire at 62.

  • Gertrude

    The way the economy is I think we need to lower our expectations. I don’t know why someone would need 70,000 a year anyway. Rent a room someplace and fix it up nice. As far as working until 70, do you think there are enough jobs to keep everyone working that long? I’m 55 and I’m not sure I’m going to make it until I’m even 62. I am healthy, willing, eager and able to work but let’s face it, the job I currently have may end and there probably won’t be another job for me–at least not fulltime work. I might work beyond 62 but I can’t count on there being a job for me.

  • Caitlin

    I too was shocked by the 7% interest assumption.  Last year my 401k averaged something like .5% interest!  I’d researched a lot and calculated a lot to choose my own portfolio breakdown… and felt like I’d gotten basically nowhere.  

    Recently I switched from my self-calculated investment percentages, and went with my 401k company’s ready-made “Moderate Aggressive” portfolio.  I just checked it again to see how it’s doing, and voila, it’s at 6.9% annualized return!  Frankly, I can’t believe it, and I’m thrilled.  I’m sure there’ll be other years that aren’t so profitable, but I’m 25, I have time for that.

  • sick of race games

    how about the average woman? how long does she live? that’s not white? Why is everything in these articles based on what race a person is. Can LV, just find out stats for the average woman. I read these articles, and I am not black or white.